Modelling of Economic Growth in Russian Agriculture

Abstract

AbstarctThe article deals with the experience and problems of production funds building in Russian agriculture. Factors of agricultural production best reflecting dynamics of output in agriculture are substantiated. The model of agricultural production in 1996-2012 was built. Keywords: production function, agricultural production, factors of agricultural production, econometric modellingAn important part of economic growth in agriculture is the production function connecting output with labor cost, volume of basic funds and other factors of production.Apparatus of production functions is sufficiently well constructed for the developed market economies; many foreign and national literary works are devoted to it. At the same time, under conditions of Russian economy, essential problems of production funds building arise. The basic difficulties appear with evaluation of production factors cost of the basic funds and labor. Under conditions of intensive structural shifts, indices of traditional production factors can not reliably reflect information necessary for the production function building. For example, in 1996-2012 in agricultural organizations the number of workers decreased practically by a fourth, the cost of basic funds in comparable prices -by 21%, production of goods increased by 33%. Thus, the question arises -whether it is appropriate in Russian economy to use the production factors and functional form which the simple production function is.The Gross Value Added (GVA) or agricultural production can be viewed as indices reflecting the output change in agriculture. The choice of output index depends on research goals, specification of production functions and moreover the availability of statistical data. The use of different indices as the output measure constrains production function and interpretation of the results obtained.In picture 1 indices of GVA's physical volume and agricultural production are presented. As it can be seen, directions of indices change considered as output indices are equal although differ quantitatively. Physical volume of agricultural production had increased from 1995 to 2012 by 26,2%, while GVA -by 51.6%. The difference is explained by volume of interim consumption and correlation of output prices and interim consumption.